Exhibit 10.259
PURCHASE AGREEMENT
------------------
THIS PURCHASE AGREEMENT (this "Agreement") is entered into as of August 30
2002 by and between OB Sports, LLC, a Delaware limited liability company
("Seller"), and Mego Financial Corp. d/b/a Leisure Industries Corporation, a New
York corporation ("Purchaser").
R E C I T A L S
- - - - - - - -
A. Seller owns all of the outstanding limited liability company
membership interest (the "Membership Interests") of Cimarron Golf Club, LLC, a
Delaware limited liability company (the "Company").
B. The Company (i) owns approximately 105 acres of real property as more
fully described on Exhibit A (the "Owned Property") and (ii) leases or has
easement access to an additional approximately 133 acres pursuant to those
certain ground leases and easement agreement, each of which is more fully
described on Exhibit B (the "Leased Property" and together with the Owned
Property, the "Property"), on which an 18-hole championship golf course (the
"Championship Golf Course") and an 18-hole executive golf course at Cimarron
Golf Resort (the "Executive Golf Course" and together with the Championship Golf
Course, the "Golf Courses") and the improvements thereon (including, but no
limited to, a clubhouse complex, turf care / maintenance building, golf cart
storage facility, practice greens, driving range, parking areas, rest rooms,
snack bar, drinking fountains, water elements, cart paths and related
landscaping) are situated.
C. The Company is also engaged in the business of operating and managing
the Golf Courses and related businesses (the "Business").
D. Purchaser desires to purchase all the outstanding Membership
Interests owned by Seller in the Company and Seller desires to sell such
Membership Interests to Purchaser, on the terms and subject to the conditions
herein contained.
A G R E E M E N T S
- - - - - - - - - -
Therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
Purchase and Sale of Membership Interests; Closing
--------------------------------------------------
1.1 Agreement to Purchase and Sell Membership Interests. On the terms
and subject to the conditions contained in this Agreement, Purchaser hereby
agrees to purchase from Seller, and Seller hereby agrees to sell to Purchaser,
all of the outstanding Membership Interests, free and clear of all liens and
encumbrances of every kind and nature whatsoever, whether arising by agreement,
operation of law or otherwise (collectively, "Claims").
1.2 Consideration. As consideration for the Membership Interests,
Purchaser agrees to: (i) assume all of the Company's outstanding liabilities
disclosed in the June 30, 2002 Pro Forma Balance Sheet included as part of the
Disclosure Schedule, which includes the Mortgage Debt, Capital Lease
obligations, Operating Leases and Land Leases set forth in the Debt / Commitment
Schedule as of July 31, 2002 included as part of the Disclosure Schedule
(provided, however, the Mortgage Debt and Capital Lease obligations shall not
exceed $10,000,000) and all current liabilities incurred by the Company in the
ordinary course of business since June 30, 2002; and (ii) issue Seller a
promissory note in the principal amount of Nine Hundred Twenty Thousand Dollars
($920,000) (the "Note"), which amount shall bear interest at the rate of 5.0%
per annum (which rate shall increase in the event of a default under the Note as
provided therein) and shall be payable in thirty-six (36) monthly payments of
principal and interest on the last day of each month commencing on January 31,
2003 and continuing through December 31, 2005. A copy of the Note is attached
hereto as Exhibit C.
1.3 Closing. The transaction contemplated by this Agreement shall be
consummated (the "Closing") at such time and place to be agreed to by the
parties, provided that the conditions of Closing set forth in Sections 4.1 and
4.2 hereof are satisfied or waived (subject to Section 6.1(b)). The date on
which the Closing shall occur in accordance with the preceding sentence is
referred to in this Agreement as the "Closing Date".
1.4 Taxes and Refunds. Purchaser shall be responsible for all taxes
and assessments, including supplemental taxes and the $5,000 property tax
consultant fee, for the Company for the fiscal year commencing June 30, 2002,
provided that Purchaser shall be entitled to any tax refunds due the Company for
any prior fiscal year.
ARTICLE II
Representations and Warranties
------------------------------
2.1 Representations and Warranties of Purchaser. Purchaser represents
and warrants to Seller as follows:
(a) Organization. Purchaser is a corporation duly organized, validly
existing and in good standing, under the laws of the State of Delaware.
Purchaser is qualified to transact business and is in good standing in each
jurisdiction in which the nature of its business or location of its
properties requires such qualification and in which the failure so to
qualify could reasonably be expected to have a material adverse effect on
the Company.
(b) Authority. Purchaser has full corporate power and authority to
enter into and perform this Agreement. The execution and delivery by
Purchaser of this Agreement and the performance by Purchaser of its
obligations hereunder have been duly authorized and approved by all
requisite corporate action. This Agreement has been duly executed and
delivered by a duly authorized officer of Purchaser.
2
(c) Consent. No consent, authorization, order or approval of, or
filing or registration with, any governmental commission, board or other
regulatory body of the United States or any state thereof is required for
or in connection with the consummation by Purchaser of the transaction
contemplated hereby.
(d) Noncontravention. Neither the execution and delivery of this
Agreement by Purchaser, nor the consummation by Purchaser of the
transaction contemplated hereby, will conflict with or result in a breach
of any of the terms, conditions or provisions of its Certificate of
Incorporation or by-laws, or of any statute or administrative regulation,
or of any order, writ, injunction, judgment or decree of any court or
governmental authority or of any arbitration award.
(e) Litigation. There is no action, suit, proceeding, investigation or
administrative proceeding or arbitration by any governmental authority
pending or threatened that could reasonably be expected to have a material
adverse effect on the consummation of the transactions contemplated hereby.
(f) Broker's Commission. Neither Purchaser, nor any of its Affiliates
(as defined below) has dealt with any person or entity who is or may be
entitled to a broker's commission, finder's fee, investment banker's fee or
similar payment for arranging the transaction contemplated hereby or
introducing the parties to each other. As used herein, an "Affiliate" is
any person or entity which controls a party to this Agreement or the
Company, which that party or the Company controls, or which is under common
control with that party or the Company.
2.2 Representations and Warranties of Seller. Seller represents and
warrants to Purchaser that, except as set forth in the schedules delivered by
Seller to Purchaser concurrently herewith and identified collectively as the
"Disclosure Schedule":
(a) Organization. The Company is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has full power and lawful authority to own, lease and
operate its assets, properties and business and to carry on its business as
now conducted. The Company is qualified to transact business and is in good
standing in each jurisdiction in which the nature of its business or
location of its properties requires such qualification and in which the
failure so to qualify could reasonably be expected to have a material
adverse effect on the Company.
(b) Authority. Seller has full corporate power and authority to enter
into and perform this Agreement. The execution and delivery by Seller of
this Agreement and the performance by Seller of its obligations hereunder
have been duly authorized and approved by all requisite corporate action.
This Agreement has been duly executed and delivered by a duly authorized
officer of Seller.
(c) Consent. No consent, authorization, order or approval of, or
filing or registration with, any governmental commission, board or other
regulatory body of the United States or any state or political subdivision
3
thereof is required for or in connection with the consummation by Seller of
the transactions contemplated hereby.
(d) Noncontravention. Neither the execution and delivery of this
Agreement by Seller, nor the consummation by Seller of the transaction
contemplated hereby, will conflict with or result in a breach of any of the
terms, conditions or provisions of Seller's or the Company's Articles of
Organization or Limited Liability Company Agreement, or of any statute or
administrative regulation, or of any order, writ, injunction, judgment or
decree of any court or governmental authority or of any arbitration award
to which the Company or Seller is a party or by which the Company or Seller
is bound.
(e) Litigation. There is no action, suit, proceeding, investigation or
administrative proceeding or arbitration by any governmental authority
pending or threatened against the Company or Seller that could reasonably
be expected to have a material adverse effect on the consummation of the
transactions contemplated hereby or affecting the Company's Property,
operations, business, products, sales practices or financial condition.
(f) Company Records. True and complete copies of the Articles of
Organization and any amendments thereto, the Limited Liability Company
Agreement, as amended and currently in force, all membership records, and
all minute books and records of the Company, have been furnished for
inspection to Purchaser. Said records accurately reflect all membership
interest transactions and the current ownership of the Company. The minute
books and records of the Company contain true and complete copies of all
resolutions adopted by the members or the managers of the Company and any
other action formally taken by them respectively as such.
(g) Equity Ownership. Seller owns 100% of the Membership Interests of
the Company free and clear of any Claims. There are no interests of the
Company of any other class authorized, issued or outstanding. There are no
outstanding subscriptions, options, warrants, rights (including preemptive
rights), calls, convertible securities or other agreements or commitments
of any character obligating the Company to issue any interests or
securities of any kind or Seller to sell or transfer its Membership
Interests in the Company.
(h) Financials. Complete and accurate copies of the original
construction budget and the unaudited balance sheets and profit and loss
statements, together with any supplementary information thereto, of the
Company for the fiscal years 2000 and 2001, the year-to-date ended March
31, 2002 and the months ended April 30, 2002, May 30, 2002 and June 30,
2002 (collectively, the "Financial Statements") have been delivered to
Purchaser. The Financial Statements accurately and completely reflect the
financial position of the Company as of the dates thereof and the results
of operations of the Company for the periods covered by said statements, in
accordance with generally accepted accounting principles ("GAAP")
consistently applied.
4
(i) Title to Assets. With the exception of the lien of Textron
Financial Corporation ("Textron") against all of the Company's assets
(including, but not limited to, the Owned Property) reflected on the
Disclosure Schedule, and the capital and operating leases between Textron
and the Company and American Equipment Leasing and the Company listed on
the Disclosure Schedule, the Company has good and marketable title to its
assets, free and clear of any Claims. No unreleased mortgage, trust deed,
chattel mortgage, security agreement, financing statement or other
instrument encumbering any of the Company's assets has been recorded,
filed, executed or delivered.
(j) Insurance. A true and correct list and description (including
coverages, deductibles and expiration dates) of all insurance policies
which are owned by the Company or which name the Company as an insured (or
loss payee) have been delivered to Purchaser. All such insurance policies
are in full force and effect and the Company has not received notice of
cancellation of any such insurance policies.
(k) Taxes. The Company has filed on a timely basis (including
authorized extensions) and in correct form all tax returns required to be
filed by the Company and the Company has not received any notice from any
taxing authority questioning the validity or accuracy of such tax returns.
All applicable tax laws and agreements have been fully complied with, and
all amounts required to be paid by the Company, to taxing authorities or
others, on or before the date hereof have been paid.
(l) Changes in Business. Since June 30, 2002, as disclosed in the
Financial Statements delivered to Purchaser, the Company has not suffered
or been threatened with any material adverse change in the usual and
customary business, operations, assets, liabilities, financial condition or
prospects of the Company.
(m) Contracts. Copies of all material contracts, leases, and
agreements to which the Company is a party and which relates to the conduct
of the Company's business has been delivered to the Purchaser (the
"Contracts"). All contracts or instruments to which the Company is a party
are in full force and binding upon the parties thereto. No material default
by the Company has occurred thereunder and, to the best of the Company's
and Seller's knowledge, no material default by the other contracting
parties has occurred or is occurring thereunder. The Company has made all
payments it is required to make under the Contracts in a timely manner,
including, but not limited to, all payments due under the leases, easements
and other agreements pertaining to the Leased Property.
(n) Licenses and Permits. A copy of all material licenses, permits,
registrations and governmental approvals, agreements and consents applied
for, pending by, issued or given to the Company, and every agreement with
governmental authorities (Federal, state, local or foreign) entered into by
the Company, which is in effect or has been applied for or is pending
(excluding Environmental Permits) (as herein defined) (the "Permits") are
contained in the Disclosure Schedule. Such Permits constitute all material
licenses, permits, registrations, approvals and agreements and consents
which are required in order for the Company to conduct its business as
5
presently conducted, including, but not limited to, all necessary special
use permits, special exceptions or other special permits, to the extent
needed.
(o) Compliance with Laws. Both the Company and its assets and business
are in compliance with all federal, state and local statutes, regulations,
ordinances, rules, regulations and policies, all court orders and decrees
and arbitration awards, and the common law, which pertain to environmental
matters or contamination of any type whatsoever.
(p) Property. All the real property the Company owns is set forth on
Exhibit A attached hereto. The Company holds fee simple title to the Owned
Property, subject only to real estate taxes not delinquent or payable and
to covenants, conditions, restrictions and easements of record, none of
which makes title to the Owned Property unmarketable and none of which are
violated by the Company or will interfere with the Company's use thereof.
All easements necessary or appropriate for the use or operation of the
Property have been obtained. The improvements on the Property are in
reasonably good operating condition and repair (ordinary wear and tear
excepted). Other than normal capital expenditures in the ordinary course of
business, no material expenditures are required to be made for the repair
or maintenance of any improvements on the Property. To the best of Seller's
knowledge, the buildings and other facilities located on the Property are
free of any latent structural or engineering defects known to the Company.
The Company or Seller has received no notice of any condemnation or eminent
domain proceeding pending or threatened against the Property or any part
thereof. Neither the Company nor Seller has any knowledge of any change or
proposed change in the route, grade or width of, or otherwise affecting,
any street or road adjacent to or serving the Property. To Seller's
knowledge, no fact or condition exists which would result in the
termination or material impairment of access to the Property from adjoining
public or private streets or ways which could result in discontinuation of
presently available or otherwise necessary sewer, water, electric, gas,
telephone or other utilities or services. The easement agreement and ground
leases described on Exhibit B (i) are in full force and effect with no
amendments thereto, and (ii) will not be adversely affected by the
transaction contemplated by this Agreement.
(q) Land Use. The current use and occupancy of the Property for
golfing and other related purposes (including, without limitation, sales of
merchandise and food and beverages) are permitted as a matter of right as a
principal use under all laws and regulations applicable thereto and will
not be adversely affected by the transaction contemplated by this
Agreement. The Zoning classification of the Property is sufficient for its
current and projected use and such classification permits the use of the
Property for a public and/or private golf course and related facilities.
6
(r) Personal Property. The furniture, fixtures, vehicles, machinery,
shelving, racks, equipment, tools, dies, molds, jigs, fixtures and other
tangible personal property owned or leased by the Company and used in its
operations (collectively, the "Equipment") constitutes all tangible
personal property necessary in order for the Company to conduct its
business as it has been conducted in the past. All Equipment is in
reasonably good operating condition and repair (ordinary wear and tear
excepted).
(s) Intellectual Property. All intellectual property used in the
Company's business (such as trademarks, patents, copyrights, service marks,
slogans, including the goodwill associated with each) is in good standing
and neither the Company nor Seller has any knowledge of any claim and has
no reason to believe that any third party is infringing on the rights of
the Company or that the Company's use of any intellectual property
infringes any right of any third party.
(t) Environmental Matters. The Company and its assets and business
(including, without limitation, the Property) are in material compliance
with all federal, state, and local statutes, governmental regulations,
ordinances, rules and policies, court orders, decrees, and arbitration
awards, and the common law which governs environmental matters or
contaminations (collectively, the "Environmental Laws"), including, without
limitation, those related to manufacture, processing, use, distribution,
treatment, storage, disposal, generation, transportation, or cleanup of
pollutants, contaminants, pesticides, radioactive substances, solid wastes
or hazardous or extremely hazardous, special, dangerous, or toxic wastes,
substances, chemicals, or materials, including, without limitation,
hazardous substances as defined in 101(14) of CERCLA, 24 U.S.C. 9601(14),
within the meaning of any applicable Environmental Law (collectively, the
"Hazardous Materials"). To the best of Seller's knowledge, the Company and
its assets and business (including, without limitation, the Property) are
in material compliance with all certifications, licenses, permits,
registrations, governmental approvals, agreements, and consents required
under or issued pursuant to any Environmental Law (collectively, the
"Environmental Permits"). A copy of any notice, citation, inquiry or
complaint which the Company has received in the past two years of any
alleged violation of or liability or potential liability under any
Environmental Law or Environmental Permit has been delivered to Purchaser,
and all violations alleged in said notices have been corrected. The Company
possesses and is in compliance with all Environmental Permits required for
the operation of the Business. Copies of all Environmental Permits issued
to the Company have been delivered to Purchaser. The Company has taken all
appropriate measures to keep such Environmental Permits in effect where
applicable and taken all remedial actions required, suggested or
recommended by the Phase One Environmental Assessment (as defined in
Section 5.11). All underground storage tanks and above-ground storage tanks
which have been heretofore removed from all Property owned, operated,
leased, managed, controlled or used by the Company have been removed in
accordance with all applicable Environmental Laws. To the best of Seller's
knowledge, there has been no storage, treatment, generation, or
transportation of any Hazardous Materials nor any spill, discharge, leak,
emission, escape, injections, dumping, disposal or other release or
threatened release of any Hazardous Materials into the environment, whether
or not notification or reporting to a governmental agency was required
("Release") by the Company in violation of, or which could give rise to any
material obligation or the incurrence of, any material response costs or
other damages under Environmental Laws or any other causes of action
arising from such Release.
7
(u) Employee and Labor Matters. The Company has delivered a list of
all employees, employed by the Company, including their name, social
security number, date of hire, date of birth, and annual compensation,
wage, or hourly rate of each employee of the Company. The Company does not
have any contract with any of its employees which cannot be terminated
without severance on 30 days notice or less. To Seller's knowledge, there
is no reason to believe that all of the Company's employees will not be
available for employment by Purchaser, after the Closing Date, on
substantially the same terms. The Company does not have any employment,
collective bargaining, or union agreements in connection with the conduct
of the Business. The Company has not, with respect to its employees,
engaged in any unfair labor practice, nor has it discriminated on the basis
of race, religion, age or sex, or other protected category in its
employment conditions or practices with respect to the employees and no
suit or proceeding is pending against the Company for such actions and no
action or claim is being made or threatened by any employee of the Company.
(v) Broker's Commission. Neither Seller, nor any of their Affiliates,
nor the Company, have dealt with any person, firm or corporation who is or
may be entitled to a broker's commission, finder's fee, investment banker's
fee or similar payment for arranging the transaction contemplated hereby
or, introducing the parties to each other.
ARTICLE III
Conduct Prior to the Closing
----------------------------
3.1 General. Between the date hereof and the Closing Date:
(a) Seller shall and shall cause the Company to give to Purchaser's
officers, employees, agents, attorneys, consultants, accountants and
lenders reasonable access during normal business hours to all of the
properties, books, contracts, documents, records and personnel of the
Company and shall furnish to Purchaser and such persons as Purchaser shall
designate to Seller such information as Purchaser or such persons may at
any time and from time to time reasonably request.
(b) Seller shall use their reasonable best efforts and make every
reasonable good faith attempt (and Purchaser shall cooperate with Seller)
to cause the Company to obtain all consents necessary to the consummation
of the transaction contemplated hereby.
(c) Seller shall cause the Company to carry on its business in the
usual and ordinary course, consistent with past practices, and Seller and
the Company shall use their reasonable best efforts to preserve the
Company's business and the goodwill of its customers, suppliers and others
having business relations with the Company and to retain the business
organization of the Company intact, including keeping available the
services of its present employees, representatives and agents, and to
maintain all of its properties in good operating condition and repair,
ordinary wear and tear excepted. Seller shall not permit or cause the
Company to dispose of any of its assets outside the ordinary course of
business.
8
(d) Without the prior written consent of Purchaser, and without
limiting the generality of any other provision of this Agreement, Seller
shall cause the Company not to take any action that would cause a material
increase in the Company's expenditures or indebtedness as set forth in the
Disclosure Schedule.
3.2 Claims and Litigation. Seller shall promptly notify Purchaser of
any (i) lawsuits, claims, proceedings or investigations which after the date
hereof it acquires knowledge of that are threatened in writing or commenced
against Seller or the Company relating to the Business, or (ii) developments or
updates in any pending lawsuits, claims, proceedings or investigations which are
currently in existence against Seller or the Company relating to the Business.
3.3 Employment Matters. Seller shall not permit the Company to enter
into any employment contract or agreement, not increase the hourly rates of pay
of employees or increase the fixed compensation payable to any officer, director
or employee of the Company, not pay any bonus or commission to any officer,
director or employee of the Company and not establish or amend any "employee
welfare benefit plan," "employee pension benefit plan" or "fringe benefit plan"
or any other plan or arrangement of a similar nature.
3.4 Notification of Material Adverse Events. Seller shall promptly
notify Purchaser in writing of any event following the date hereof of which
Seller is or becomes aware that will or is likely to have a material adverse
effect on the business, xxxxx-cial condition, prospects of the Company or the
Business.
3.5 Confidentiality. Each of the parties hereto shall preserve and
maintain, and shall cause each of its affiliates to preserve and maintain,
proprietary information and trade secrets of the other party, and shall not
disclose to any third person or use any such proprietary information or trade
secret for personal advantage, except that any party hereto shall be free to use
or disclose any proprietary information and trade secrets that (i) were already
in its possession at the time of disclosure to it; (ii) are a matter of public
knowledge; (iii) hereafter become a matter of public knowledge other than
through the receiving party; (iv) are lawfully obtained by the receiving party
from a third party that is not, to the disclosing party's knowledge, after due
inquiry, subject to any restrictions of confidentiality; or (v) are required to
be disclosed by the receiving party by law or in response to any inquiries by
any governmental authority. In the event that the Closing does not occur, upon
the request of the disclosing party, each receiving party agrees to return or
destroy all written documentation provided to it.
3.6 No Solicitation of Transactions. From the date hereof until the
transactions contemplated hereby are consummated or this Agreement is
terminated, Seller agrees that neither it nor any holder of any equity interest
in the Company shall, directly or indirectly, solicit, initiate, knowingly
encourage or enter into any agreement with respect to the sale or other transfer
of ownership interests in the Company or the sale of any of the assets of the
Company. Seller shall notify Purchaser of any contact or discussions it has
with any other party regarding the sale of the Company.
9
3.7 Operation of the Business. Attached to the Disclosure Schedule is
a summary as of July 31, 2002 of existing and projected published green fees,
membership fees, tournament fees, driving range fees, club rentals, and other
rates for the Golf Courses. From the date of execution of this Agreement until
the date of Closing, Seller shall not permit the Company to reduce or cause to
be reduced any published fees, rates or charges set forth in the Disclosure
Schedule, or any other changes for which Seller or the Company has operational
control other than in the ordinary course of business.
3.8 Casualty. In the event any of the improvements upon the Property
are damaged or destroyed by fire or other casualty prior to the date of Closing
and the cost to repair destroyed by fire or other casualty prior to the date of
Closing and the cost to repair any such damage exceeds $100,000 and Seller has
elected by written notice delivered to Purchaser not later than ten (10) days
after the damage or destruction not to repair same at least ten (10) days prior
to the Closing Date to substantially the same condition as prior to said
casualty, Purchaser shall have the right to elect either to terminate this
Agreement or to proceed to consummate the transaction contemplated by this
Agreement. Such election shall be made by notice to Seller not later than ten
(10) days following the date on which Seller has notified Purchaser of such
damage or destruction and when Seller notifies Purchaser if the Property will be
repaired. In the event Purchaser elects to terminate this Agreement, the
parties shall have no further rights and liabilities with respect to each other.
Failure of Purchaser to so terminate this Agreement shall conclusively
constitute Purchaser's election to proceed with the transaction contemplated by
this Agreement. Unless Purchaser has terminated this Agreement as herein
provided, upon Closing, Seller shall assign to Purchaser all rights to insurance
proceeds related to such damage or destruction, which have not theretofore been
expended in cash for repairs to the Property by Seller or the Company.
In the event of damage or destruction whereby the cost to repair the same
is less than $100,000 and Seller has not repaired same at least ten (10) days
prior to the Closing Date to substantially the same condition as prior to said
casualty, the transaction contemplated by this Agreement shall be consummated in
accordance with the terms hereof, without a reduction in the consideration
except for a credit to Purchaser in the amount of the applicable deductible and,
at Closing, Seller shall assign to Purchaser all rights to insurance proceeds
related to such damage or destruction, which have not theretofore been expended
in cash for repairs to the Property by Seller or the Company.
3.9 Condemnation. In the event, prior to the Closing Date, a "Material
Portion of the Property" (i.e. greater than ten percent (10%) of the total
square footage of the Property or any portion of the improvements) is taken by
eminent domain or is under notice of an eminent domain proceeding or access to
the Property is materially reduced or restricted, Purchaser shall have the right
to elect either to terminate this Agreement or to proceed to consummate the
purchase and sale hereunder, without a reduction in the Purchase Price provided
Seller shall assign to Purchaser all rights to the award. Such election shall be
made by written notice to Seller not later than ten (10) days following the date
on which Seller has notified Purchaser of such eminent domain. In the event
Purchaser elects to terminate this Agreement, the parties shall have no further
rights and liabilities with respect to each other. Failure of Purchaser to so
terminate this Agreement shall conclusively constitute its election to proceed
with the purchase and sale hereunder. Unless Purchaser has terminated this
Agreement as herein provided, upon Closing, Seller shall assign to Purchaser all
rights to the award.
10
In the event, prior to the Closing Date, less than a Material Portion of
the Property is taken by eminent domain or is under notice of an eminent domain
proceeding, the transaction contemplated hereunder shall be consummated in
accordance with the terms hereof, without a reduction in the consideration, and,
at Closing, Seller shall assign to Purchaser all rights to the award.
ARTICLE IV
Seller's Conditions to Closing
------------------------------
The obligation of Seller to close the transaction contemplated hereby is
subject to the fulfillment of all of the following conditions on or prior to the
Closing Date, upon the non-fulfillment of any of which, this Agreement may, at
Seller' option, be terminated pursuant to and with the effect set forth in
Article VIII:
4.1 Accuracy of Representations and Warranties. Each and every
representation and warranty made by Purchaser shall have been true and correct
when made and shall be true and correct in all material respects as if
originally made on and as of the Closing Date.
4.2 Performance of Obligations. All obligations of Purchaser to be
performed hereunder through, and including on, the Closing Date (including,
without limitation, all obligations which Purchaser would be required to perform
at the Closing if the transaction contemplated hereby was consummated) shall
have been performed.
4.3 Litigation. No suit, proceeding or investigation shall have been
commenced or threatened by any governmental authority or private person on any
grounds to restrain, enjoin or hinder, or to seek material damages on account
of, the consummation of the transaction contemplated hereby.
4.4 Company Approval. Purchaser shall have taken all necessary action
to authorize the execution, delivery and performance of this Agreement and the
transactions contemplated hereby.
4.5 Textron Approval. Seller shall have received approval from Textron
to sell the Membership Interests of the Company to Purchaser and Seller shall
have entered into such agreements with Textron regarding its other obligations
as approved by Seller.
11
ARTICLE V
Purchaser's Conditions to Closing
---------------------------------
The obligation of Purchaser to close the transaction contemplated hereby is
subject to the fulfillment of all of the following conditions on or prior to the
Closing Date, upon the nonfulfillment of any of which, this Agreement may, at
Purchaser's option, be terminated pursuant to and with the effect set forth in
Article VIII:
5.1 Accuracy of Representations and Warranties. Each and every
representation and warranty made by Seller shall have been true and correct when
made and shall be true and correct in all material respects as if originally
made on and as of the Closing Date.
5.2 Performance of Obligations. All obligations of Seller to be
performed hereunder through, and including on, the Closing Date (including,
without limitation, all obligations which Seller would be required to perform at
the Closing if transaction contemplated hereby was consummated) shall have been
performed.
5.3 Consents and Permits. All necessary consents shall have been
obtained or, to the extent the Permits held by the Company would terminate upon
a change of control of the Company, Purchaser shall have either obtained
licenses and permits on substantially the same terms as such Permits, or shall
have obtained binding commitments from the applicable governmental authorities
to issue such licenses and permits to the Company following the Closing.
5.4 Litigation. No suit, proceeding or investigation shall have been
commenced or threatened by any governmental authority or private person on any
grounds to restrain, enjoin or hinder, or to seek material damages on account
of, the consummation of the transaction contemplated hereby.
5.5 Company Approval. Seller shall have taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
transactions contemplated hereby.
5.6 Due Diligence. Purchaser shall have completed an inspection of the
assets, properties, liabilities and records of the Business satisfactory to it
in all respects including, but not limited to, a physical inspection of the
Property.
5.7 Material Adverse Changes. There shall have been no material
adverse changes in the results of operations, conditions (financial or
otherwise), properties, assets, business or prospects of the Business or the
Company, including, but not limited to, the golf courses, driving range and
putting greens.
5.8 Raintree Transaction. Purchaser shall have acquired all of the
Raintree North America Resorts, Inc.'s ("Raintree") right, title and interest in
and to that certain Project Development, Management and Sales Agreement dated
May 3, 2000 (the "Raintree Project Development Agreement") by and between
Raintree and Royale Mirage Partners, L.P. ("RMP"), which proposed transaction
shall require the approval of Textron and such other consents and approvals as
may be necessary or required. Further, the Raintree Project Development
Agreement shall have been amended to the satisfaction of Purchaser.
12
5.9 Creditor Approval. The Company shall have obtained approval from
certain creditors of the Company, including, but not limited to, Textron and
American Equipment Leasing.
5.10 Textron Financing Terms. Purchaser and Textron shall have reached
an agreement on the modification of certain terms and conditions in Textron's
credit agreement with the Company and Textron's credit agreement with respect to
Textron's interest in the Raintree Project Development Agreement Interest to the
mutual satisfaction of Purchaser and Textron. Further Seller shall have
executed all documentation Textron deems appropriate to restructure Textron's
outstanding loans with Seller.
5.11 Real Property; Title Policy. Seller shall have delivered to
Purchaser copies of all documentation relating to the Property, including, but
not limited to: (i) a copy of an environmental report regarding the Property,
including without, limitation, a Phase One Environmental Assessment dated
November, 2000 prepared by Xxxxxxxx, Xxxxx & Associates, Inc. (the "Phase One
Environmental Assessment"); (ii) a copy of the latest tax xxxx for the Property;
and (iii) a copy of the most current title policy for the Property together with
a copy of all documents referenced therein, including the survey against which
insurance was procured. Further, Purchaser shall have procured a title policy
on the Property from First American Title Company on terms and conditions
acceptable to Purchaser.
5.12 Resignations. Seller shall have resigned as manager of the
Company and the current officers of the Company shall have resigned from such
positions.
5.13 Elimination / Transfer of Unassumed Liabilities. Seller shall
have eliminated and/or transferred all liabilities that Purchaser is not
assuming after the Closing, including, but not limited to: (i) the intercompany
payable owed by the Company to Seller; (ii) the intercompany revolving credit
debt balance owed by the Company to Seller; (iii) the long-term junior
subordinated debt balance owed by the Company to Seller, including all related
accrued interest; (iv) all writeoff deferred financing costs and related
accumulated amortization; and (v) any income tax attributes related to the
elimination / transfer of any of the foregoing. Seller shall provide written
evidence of the elimination or transfer of such liabilities on or before
Closing.
5.14 Golf Course Development Agreement. Seller shall executed an
Assignment and Assumption Agreement assigning all of Seller's right, title and
interest in and to that certain Agreement dated March 18, 1999 by and among RMP,
L.P., Xxxx Xxxxxx, Xxxxxx Xxxxxxxx, Seller and the Company (the "Golf Course
Development Agreement"). Further, Purchaser and RMP shall have amended the Golf
Course Development Agreement to the extent needed and on terms acceptable to
Purchaser.
5.15 Seller's Additional Deliveries. In addition to this Agreement, Seller
shall deliver or cause the Company to deliver to Purchaser the following:
13
(a) A certified copy of the Company's Articles of Organization;
(b) Certificates of good standing of the Company issued by the
Secretary of the State of Delaware and California;
(c) A letter agreement between OB Sports Golf Management, LLC, the
Company and Purchaser regarding the management of the Golf Courses after
the Closing; and
(d) An Affidavit of No Change with respect to the Property, certifying
that no improvements have been made to the Property since the date of the
most current survey delivered to Purchaser prior to the Closing.
ARTICLE VI
Termination/Remedy
------------------
6.1 Termination of Agreement. This Agreement may be terminated only as
provided below:
(a) by Purchaser and Seller upon mutual written consent at any time
prior to the Closing;
(b) by Purchaser by giving written notice to Seller at any time prior
to the Closing in the event (i) Seller has breached any representation,
warranty, or covenant contained in this Agreement in any material respect
(ii) any condition to Purchaser closing the transaction contemplated hereby
has not been satisfied or (iii) of damage or condemnation of the Property
in accordance with Sections 3.8 and 3.9; or
(c) by Seller by giving written notice to Purchaser at any time prior
to the Closing in the event (i) Purchaser has breached any representation,
warranty, or covenant contained in this Agreement in any material respect
or (ii) any condition to Seller closing the transaction contemplated hereby
has not been satisfied.
6.2 Remedies. In the event of a breach of this Agreement, the
non-breaching party shall not be limited to the remedy of termination of this
Agreement, but shall be entitled to pursue all available legal and equitable
rights and remedies, and shall be entitled to recover all of its reasonable
costs and expenses incurred in pursuing them (including, without limitation,
reasonable attorneys' fees).
14
ARTICLE VII
Post-Closing Agreements
-----------------------
7.1 Post-Closing Agreements. From and after the Closing, the parties
shall have the respective rights and obligations which are set forth in the
remainder of this Article VII.
7.2 Disclosure of Confidential Information. As a further inducement
for Purchaser to enter into this Agreement, Seller agree that for the longest
period permitted by law after the Closing Date, Seller shall, and shall cause
its Affiliates to, hold in strictest confidence, and not, without the prior
written approval of Purchaser, use for their own benefit or the benefit of any
party other than Purchaser or disclose to any person, firm or corporation other
than Purchaser (other than as required by law or to that party's accountants,
attorneys, professional advisers and key employees) any information of any kind
relating to the Company's business, except such information as was publicly
available prior to the Closing Date.
7.3 Hiring Away Employees. For a period of two (2) years from the
Closing Date, Seller shall not take any actions which are calculated to persuade
any salaried, technical or professional employees, representatives or agents of
the Company to terminate their association with the Company. Seller agrees that
in the event of a breach of this Section 7.3, Purchaser shall be entitled to
injunctive relief in addition to such other legal and equitable remedies that
may be available.
7.4 Survey and Title Matters. Seller acknowledges that Purchaser is
making an accommodation to Seller by not requiring that an updated survey be
completed prior to Closing. As a result Purchaser shall obtain an updated
survey at Seller's sole cost and expense. Further, if such update survey
discloses any new title exceptions or survey issues, Purchaser shall notify
Seller and Seller shall cure such new objections within thirty (30) days. If
Seller is unable to cure any new title exceptions or survey matters within the
specified timeframe, Purchaser shall have the right to seek indemnification
against Seller pursuant to Section 8.1(e) without being subject to the
limitations set forth in Section 8.3.
7.5 Estoppel Certificates. Within 30 days after Closing, (i) Seller
shall have obtained an estoppel certificate from Northern Wolverine 19/99, Inc.,
a Nevada corporation and lessor of that certain 83 acre property described in
that certain Ground Lease dated March 31, 1999 by and between Wolverine and the
Company (the "Ground Lease") in the form acceptable to Purchaser, and (ii)
Purchaser shall have received written and/or verbal confirmation from the
Coachella Valley Water District ("CVWD") that all payments required to be made
by the Company prior to the Closing to CVWD under that certain Easement
Agreement dated March 31, 1999 entered into by the Company with the CVWD (the
"Easement Agreement") have been made, that neither party is in default under the
Easement Agreement as of the Closing Date and that neither party has any claims
against the other relating to the Easement Agreement. In the event that Seller
fails to obtain the estoppels set forth, Purchaser shall have the right to seek
indemnification against Seller for any matters that occur prior to the Closing
that relate to the Ground Lease, the Easement Agreement, their respective
validity, enforceability or claims or defaults thereunder as the same relates to
the Leased Property, pursuant to Section 8.1(f) without being subject to the
limitations set forth in Section 8.3.
15
7.6 Further Assurances. The parties shall execute such further
documents, and perform such further acts, as may be necessary to transfer and
convey the Membership Interests to Purchaser on the terms herein contained and
to otherwise comply with the terms of this Agreement.
ARTICLE VIII
Indemnification
---------------
8.1 Seller's Indemnification Obligations. Seller shall indemnify, save
and keep Purchaser, and its officers, directors, employees, agents, successors
and assigns (each a "Purchaser Indemnitee" and collectively the "Purchaser
Indemnitees") forever harmless against and from all damages, liabilities,
demands, causes of actions, penalties, fees, costs and expenses sustained or
incurred by any Purchaser Indemnitee, as a result of or arising out of or by
virtue of:
(a) any material inaccuracy in or breach of any representation and
warranty made by Seller to Purchaser herein or in any closing document
delivered to Purchaser in connection herewith;
(b) the breach by Seller of, or failure of Seller to comply with, any
of the covenants or obligations under this Agreement to be performed by
Seller;
(c) any material obligation relating to the Raintree Project
Development Agreement for which Seller or the Company was responsible prior
to the Closing Date;
(d) any material default, breach, alleged default, or alleged breach
by Seller or the Company under the Agreement entered into March 19, 1999
among Seller, the Company, Royale Mirage Partners, L.P., Xxxx Xxxxxx and
Xxxxxx Xxxxxxxx (the "RMP Agreement") prior to the Closing Date; or
(e) the updated survey to be conducted after the Closing on the
Property; or
(f) any matters relating to the Leased Property prior to the Closing,
including, without limitation, enforcement of the Company's rights to the
Leased Property.
8.2 Purchaser's Indemnification Obligations. Purchaser shall
indemnify, save and keep Seller and its officers, directors, employees, agents,
successors and assigns (each a "Seller Indemnitee" and collectively the "Seller
Indemnitees") forever harmless against and from all damages, liabilities,
demands, causes of actions, penalties, fees, costs and expenses sustained or
incurred by any Seller Indemnitee, as a result of or arising out of or by virtue
of:
(a) any material inaccuracy in or breach of any representation and
warranty made by Purchaser to Seller herein or in any closing document
delivered to Seller in connection herewith;
16
(b) the breach by Purchaser of, or failure of Purchaser to comply
with, any of the covenants or obligations under this Agreement to be
performed by Purchaser;
(c) any material obligation relating to the Raintree Project
Development Agreement arising prior to the Closing Date for which Seller or
the Company was not responsible or arising after the Closing Date; or
(d) any and all matters of any nature whatsoever, related directly or
indirectly, or arising out of or in connection with the development,
ownership, operation, management, maintenance, repair and/or improvement of
the Timeshare Project Property and the Timeshare Project Improvements (as
those terms are defined in the RMP Agreement), except to the extent arising
from Seller's or the Company's negligence or willful misconduct and subject
to Section 8.1(d).
8.3 Limitations on Indemnification.
(a) Purchaser's remedies following the Closing regarding indemnity
claims described in Section 8.1 shall be limited to a right of offset
against the Note up to the original principal amount of the Note plus
interest accrued thereon during the Indemnification Period (the "Offset
Right"). Purchaser shall hold this Offset Right from the Closing Date for a
period of six (6) months thereafter (the "Indemnification Period"), at
which point the Offset Right shall automatically terminate in the absence
of any written claim(s) delivered by Purchaser to Seller during the
Indemnification Period.
(b) Seller's remedies following the Closing regarding indemnity claims
described in Section 8.2 shall be limited to an increase in the principal
amount of the Note by an amount equal to the original principal amount of
the Note plus interest accrued thereon during the Indemnification Period
(the "Increase Right"). Seller shall hold this Increase Right from the
Closing Date for the Indemnification Period, at which point the Increase
Right shall automatically terminate in the absence of any written claim(s)
delivered by Seller to Purchaser during the Indemnification Period.
(c) Neither party shall be entitled to bring a written indemnity claim
against the other party until the aggregate sum of all claims exceed a
minimum amount of $100,000. The maximum amount of any and all indemnity
claims that one party will be entitled to bring against the other party, if
any, shall be limited to a maximum amount of the principal amount of the
Note, plus the amount of interest accruing on the Note at the rate of 5.0%
per annum during the Indemnification Period. After applying any Offset
Right against the Note or any Increase Right to the Note, as the case may
be, the remaining principal balance (including any interest accrued through
such date) shall be amortized and payable in thirty-six (36) monthly
payments of principal and interest, as described in Section 1.2. The
limitations contained in this Section 8.3 do not apply to an
indemnification claim asserted by Purchaser under Sections 8.1(c), (d), (e)
and (f) or by Seller under Sections 8.2(c) and (d).
17
ARTICLE IX
Miscellaneous
-------------
9.1 Fees. Except as set forth herein, each party hereto shall bear all
fees, costs and expenses incurred by such party in connection with, relating to
or arising out of the negotiation, preparation, execution, delivery and
performance of this Agreement and the consummation of the transaction
contemplated hereby, including, without limitation, attorneys', accountants' and
other professional fees and expenses.
9.2 Publicity. Except as otherwise required by law or applicable stock
exchange rules, press releases concerning this transaction shall be made only
with the prior written agreement of Seller and Purchaser. Except as otherwise
required by law or applicable stock exchange rules, no such press releases or
other publicity shall state the amount of the consideration.
9.3 Notices. All notices required or permitted to be given hereunder
shall be in writing and may be delivered by hand, by facsimile, by nationally
recognized private courier, or by United States mail. Notices delivered by mail
shall be deemed given three (3) business days after being deposited in the
United States mail, postage prepaid, registered or certified mail. Notices
delivered by hand by facsimile, or by nationally recognized private carrier
shall be deemed given on the first business day following receipt; provided,
however, that a notice delivered by facsimile shall only be effective if such
notice is also delivered by hand, or deposited in the United States mail,
postage prepaid, registered or certified mail, on or before two (2) business
days after its delivery by facsimile. All notices shall be addressed as
follows:
If to Seller: OB Sports, LLC
c/o Rice Sangalis Toole & Xxxxxx
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx
Fax: (000) 000-0000
with a copy to: Holland & Knight LLP
2300 U.S. Bancorp Tower
000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Fax: (000) 000-0000
If to Purchaser: Mego Financial Corp.
d/b/a Leisure Industries Corporation
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, CEO
Fax: (000) 000-0000
18
with a copy to: Ungaretti & Xxxxxx
0000 Xxxxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx
Fax: (000) 000-0000
and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section 9.3.
9.4 Transfer Taxes. Seller shall pay the cost of all sales, use,
excise and transfer taxes, and all owners' title insurance premiums and
surveyor's charges, which may be payable in connection with the transaction
contemplated hereby.
9.5 Entire Agreement. This Agreement and the instruments to be
delivered by the parties pursuant to the provisions hereof constitute the entire
agreement between the parties and shall be binding upon and inure to the benefit
of the parties hereto and their respective legal representatives, successors and
permitted assigns. Each Exhibit and the Disclosure Schedule, shall be
considered incorporated into this Agreement. Any amendments, or alternative or
supplementary provisions to this Agreement must be made in writing and duly
executed by an authorized representative or agent of each of the parties hereto.
9.6 Survival; Non-waiver. Subject to Section 8, all representations
and warranties shall survive the Closing regardless of any investigation or lack
of investigation by any of the parties hereto. The failure in any one or more
instances of a party to insist upon performance of any of the terms, covenants
or conditions of this Agreement, to exercise any right or privilege in this
Agreement conferred, or the waiver by said party of any breach of any of the
terms, covenants or conditions of this Agreement, shall not be construed as a
subsequent waiver of any such terms, covenants, conditions, rights or
privileges, but the same shall continue and remain in full force and effect as
if no such forbearance or waiver had occurred. No waiver shall be effective
unless it is in writing and signed by an authorized representative of the
waiving party. A breach of any representation, warranty or covenant shall not
be affected by the fact that a more general or more specific representation,
warranty or covenant was not also breached.
9.7 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall constitute but one instrument.
9.8 Severability. The invalidity of any provision of this Agreement or
portion of a provision shall not affect the validity of any other provision of
this Agreement or the remaining portion of the applicable provision.
9.9 Applicable Law. This Agreement shall be governed and controlled as
to validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of California applicable to contracts
made in that State.
19
9.10 Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, and their successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended
to confer on any person other than the parties hereto, and their respective
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.11 Assignability. This Agreement shall not be assignable by either
party without the prior written consent of the other party, except that at or
prior to the Closing, Purchaser may assign its rights and delegate its duties
under this Agreement to a subsidiary or affiliate of Purchaser and may assign
its rights under this Agreement to its lenders for collateral security purposes,
and after the Closing, Purchaser may assign its rights and delegate its duties
under this Agreement to any third party. No such assignment shall relieve
Purchaser of any of its liabilities under this Agreement.
9.12 Amendments. This Agreement shall not be modified or amended
except pursuant to an instrument in writing executed and delivered on behalf of
each of the parties hereto.
9.13 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
[signature page attached]
20
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
SELLER:
OB Sports, LLC
By:
--------------------------------
Its:
--------------------------------
PURCHASER:
Mego Financial Corp.,
d/b/a Leisure Industries Corporation
By:
----------------------------------
Its:
---------------------------------
SIGNATURE PAGE TO LLC PURCHASE AGREEMENT
21
